Thursday, during a speech given at the Economic Club of New York, Republican presidential nominee Donald Trump outlined his comprehensive economic policy.
"My plan will embrace the truth that people flourish under a minimum government burden, and it will tap into the incredible unrealized potential of our workers and their dreams," he said. "Right now, 92 million Americans are on the sidelines, outside the workforce, and not part of our economy. It's a silent nation of jobless Americans.
"Look no further than the city of Flint, where I just visited. The jobs have stripped from this community, and its infrastructure has collapsed. In 1970, there were more than 80,000 people in Flint working for GM — today it is less than 8,000. Now Ford has announced it is moving all small car production to Mexico.
"It used to be cars were made in Flint and you couldn't drink the water in Mexico. Now, the cars are made in Mexico and you can't drink the water in Flint. We are going to turn this around.
"My economic plan rejects the cynicism that says our labor force will keep declining, that our jobs will keep leaving, and that our economy can never grow as it did once before."
Trump's proposal calls for sweeping reforms in tax, trade, energy and regulatory policies, which he said economists have estimated will "conservatively" boost growth to 3.5 percent per year on average. That was the minimum economic growth of the U.S. between the end of World War II in 1945 and 2000.
Faster growth, Trump argued, will create "as many as 25 million new jobs over the next decade."
The comprehensive economic plan includes five major proposals, most of which he has previously announced in earlier speeches. They are, with explanations from the Trump campaign:
A pro-growth tax plan — Every income group receives a tax cut under the Trump plan. Millions of low-income taxpayers will be removed from the tax rolls. The greatest percentage reduction in tax bill goes to lower income taxpayers, as shown by these examples:
- A married couple earning $50,000 per year with two children and $8,000 in child care expenses will save 35% from their current tax bill.
- A married couple earning $75,000 per year with two children and $10,000 in child care expenses will receive a 30% reduction in their tax bill.
- A married couple earning $5 million per year with two children and $12,000 in child care expenses will get only a 3% reduction in their tax bill.
The plan lowers the corporate tax rate to 15%. The current 35% rate is one of the highest in the world, making domestic investment unattractive. It includes a 10% tax on repatriation, and many larger businesses will want to repatriate trillions of dollars that they now keep abroad to avoid taxes.
The plan also allows U.S.-based manufacturers to elect full expensing of plant and equipment, an invitation to massive investment. If they elect this approach, they will give up the ability to deduct interest expense.
Tax brackets in the individual income tax will be reduced from 7 to 3. Tax rates will be 12%, 25% or 33%, with thresholds very similar to the House GOP plan.
The new brackets will also provide a lower income tax rate for high-income individuals and small businesses. The plan will cap deductions at $100,000 for single filers and $200,000 for married filers, eliminating many costly tax loopholes while stimulating growth.
The standard deduction will be $30,000 dollars for married couples and $15,000 dollars for single individuals. Most taxpayers will have no need to itemize, simplifying their tax returns and making it easier to file.
The plan provides a child care deduction for children up to 13 years of age for average child care expense. There's an income cap, so the new deductions don't apply to the rich.
Finally, the plan eliminates the carried interest loophole for Wall Street and the death tax, which falls especially hard on small businesses and farmers.
A modern regulatory framework — In 2015 alone, federal agencies issued over 3,300 final rules and regulations, up from 2,400 the prior year. Studies show that small manufacturers face more than three times the burden of the average U.S. business, and the hidden tax from ineffective regulations amounts to "nearly $15,000 per U.S. household" annually. Excessive regulation is costing our country as much as $2 trillion dollars per year, and Trump will end it.
The Trump plan calls for an immediate halt to new federal regulations and a very thorough agency-level review of previous regulations to see which need to be scrapped. Agencies will be required to list all their regulations and rank them in terms of their contribution to growth, health and safety, with the goal of strengthening the useful ones and reducing the harmful ones.
Specific regulations to be eliminated include:
- The EPA's Clean Power Plan, which will impose $7.2 billion in annual costs, according to the agency itself — and far more according to private sector critics. The rule if implemented will essentially shut down most, if not all, electric power plants fueled by coal.
- The EPA's rule on the "Waters of the United States" (WOTUS) covers virtually all waters in the nation whether navigable or not and, by extension, much of the land use, from ponds on farms to storm run-off from home building sites.
- The EPA's stricter standard for ground-level ozone would add $1.4 billion to annual emissions compliance costs (excluding $800 million for California alone). The new ozone standard will push hundreds of communities out of compliance, and force states to devise plans to limit industrial activity and transportation projects, as well as replace existing emissions control equipment with more advanced (and costly) emissions equipment.
- The FDA Food Police, which dictate how the federal government expects farmers to produce fruits and vegetables and even dictates the nutritional content of dog food. The rules govern the soil farmers use, farm and food production hygiene, food packaging, food temperatures, and even what animals may roam which fields and when. It also greatly increased inspections of food "facilities," and levies new taxes to pay for this inspection overkill.
- The EPA's Renewable Identification Number (RIN) program penalizes refineries if they do not meet certain blending requirements. These requirements have turned out to be impossible to meet and are bankrupting many of the small and midsize refineries in this country. These regulations will give Big Oil an oligopoly by destroying the small to mid-size refineries.
An America-first trade policy — Trade will be an important driver of economic growth along with other key structural reforms. Donald Trump will ensure that every single one of our trade agreements increases our GDP growth rate, reduces our trade deficit, and strengthens our manufacturing base.
There will be no Trans-Pacific Partnership, even if the President and Congress are reckless enough to pass it in a lame duck session against the will of the American people.
Donald Trump will appoint the toughest and smartest trade negotiators to fight on behalf of American workers and direct the Secretary of Commerce to identify every violation of trade agreements a foreign country is currently using to harm our workers.
NAFTA will be renegotiated to get a better deal for American workers. If our partners do not agree to a renegotiation, America will withdraw from the deal.
China will be labeled a currency manipulator. Any country that devalues their currency in order to take unfair advantage of the United States will be met with sharply, and that includes tariffs and taxes.
The U.S. Trade Representative will bring trade cases against China. China's unfair subsidy behavior is prohibited by the terms of its entrance to the WTO. If China does not stop its illegal activities, including its theft of American trade secrets, Donald Trump will use every lawful presidential power to remedy trade disputes, including the application of tariffs.
An unleashing of America's own energy resources — The Trump energy policy will make us energy independent, create millions of new jobs, and protect clean air and clean water. We have one of the world's most diverse resource bases, from abundant coal, oil and natural gas to geothermal, solar and wind. We are also the world's leader in energy technologies like nuclear power.
The United States will become the world's dominant leader in energy production. The first step will to undo the damage of the last eight years. By 2030, the Obama-Clinton energy restrictions will eliminate another half a million manufacturing jobs, reduce economic output by $2.5 trillion, and reduce incomes by $7,000 per person.
The Trump Administration will unleash an energy revolution that will bring vast new wealth to our country. We will support coal production. We will support safe hydraulic fracturing. We will allow energy production on federal lands in appropriate areas. We will also open up vast areas of our offshore energy resources for safe production.
Lifting unnecessary restrictions on all sources of American energy (such as coal and onshore and offshore oil and gas) will (a) increase GDP by more than $100 billion annually, add over 500,000 new jobs annually, and increase annual wages by more than $30 billion over the next seven years; (b) increase federal, state, and local tax revenues by almost $6 trillion over four decades; and (c) increase total economic activity by more than $20 trillion over the next 40 years.
The Trump Administration will ensure a reliable, streamlined regulatory and permitting process for energy infrastructure projects, and will work with their sponsors to find workable solutions so that worthy energy infrastructure projects can be completed on time and on budget.
Finally, a Trump Administration will support continued research into advanced energy technologies, but we will not be in the business of government picking winners and losers. We need to allow the free market and the innovative spirit of the American people to product the new energy technologies of tomorrow, without undue government interference.
The "Penny Plan" — The "Penny Plan" would reduce non-defense, non-safety net spending by one percent of the previous year's total each year. For example, in FY 2016 non-defense discretionary spending is set at $518 billion. If spending is cut by 1%, it will be at $513 billion, a savings of $6 billion compared to the FY 2017 statutory spending level of $519 billion. This would be repeated every year.
No reductions to Defense spending.
Social Security, Medicare, and Medicaid would be exempted.
Over ten years, the plan will reduce spending (outlays) by $1 trillion.
"Under this American System, every policy decision we make must pass a simple test: Does it create more jobs and better wages for Americans?" Trump said. "If we lower our taxes, remove destructive regulations, unleash the vast treasure of American energy, and negotiate trade deals that put America first, then there is no limit to the number of jobs we can create and the amount of prosperity we can unleash.
"America will truly be the greatest place in the world to invest, hire, grow and to create new jobs, new technologies, and entire new industries. Instead of driving jobs and wealth away, America will become the world's great magnet for innovation and job creation.
"My opponent's plan rejects this optimism. She offers only more taxing, regulating, more spending and more wealth redistribution — a future of slow growth, declining incomes, and dwindling prosperity.
"The only people who get rich under Hillary Clinton's scheme are the donors and the special interests. In Hillary Clinton's America, we have surrendered our status as the world's great economy, and we have surrendered our middle class to the whims of foreign countries.
"Not one single idea she has will create one net American job, or create one new dollar of American wealth for our workers. The only thing she can ever offer is a welfare check. Our plan will produce paychecks, and they're going to be great paychecks for millions of people now unemployed."
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